State Employers To Get Bill For Interest

July 19, 1991|By MICHAEL REMEZ; Courant Staff Writer

Connecticut employers will get another state tax bill at the end of the month, this one for the interest paid on money borrowed from the federal government to keep the state unemployment trust fund in business. The fund ran out of money at the start of the year, essentially because the amount needed to pay benefits to a growing number of jobless people has far exceeded taxes paid into the system by employers.

Payments to the unemployed never stopped, however, because the state borrowed $251.5 million from the federal unemployment trust fund. Hoping to limit interest payments at 8.6 percent, the state has paid back about $107 million.

Borrowing for July, August and September is expected to bring the new balance to about $250 million by Sept. 30.

As a result, the state labor department will bill most employers a total of about $9.3 million at the end of the month. Employers will pay slightly less than 1/10 of 1 percent of their total taxable wage base, which is $7,100 for each worker. That amounts to a tax of about $7 a worker.

The tax will be based on experience ratings for the fiscal year that started July 1, 1989, the most recent year for which statistics are available.

C. Richard Ficks, spokesman for the labor department, said businesses will make an average payment of $164. The minimum payment will be $10.

The assessment cannot be added to regular unemployment tax bills because federal law requires different accounting procedures. Employers will have 30 days to pay the bills without a monthly interest charge. Failure to pay within 60 days could lead to a 10 percent, or $50 penalty, whichever is greater.

Early in this year's legislative session, organized labor groups pushed for increases in employer taxes for the unemployment program to keep the fund solvent. Business groups said that this was not the year to raise taxes, adding that the method used to calculate payments would force the fund to correct itself over time. Advocates for both sides say the issue is likely to resurface next year.